What do new charges in college hoops corruption case mean?

The feds’ investigation into college hoops corruption had another layer added to it on Tuesday. (Yahoo Sports illustration)

More than half a year has passed since the initial wave of arrests and indictments in the federal basketball corruption case. As the months went by, a simple but persistent question loomed over the sport: When will the next shoe drop?

The formal inclusion of both the University of Kansas and North Carolina State stole the headlines – federal documents outlined detailed schemes that allege five-figure payments intended to lure blue-chip recruits to those schools. (And, in one case, outbid another.) But the bigger picture that comes with the additional details, according to legal experts, both strengthen the case against Gatto and also show how the federal case is coming into a narrower focus.

“The authorities have done what looks like a good job in the new allegations following the money and laying out a series of financial transactions in a workmanlike manner,” said Stephen L. Hill Jr., a partner at Dentons in Kansas City and former U.S. Attorney who prosecuted a similar case against AAU coach Myron Piggie in the early 2000s. “The question now is whether they have an individual or group of individuals that can help them fit all the pieces together in a convincing fashion.”

The scenes in the latest charging document read like something out of a movie, with the introduction of a character revealed in the paperwork as “CC-3” who could fit Hill’s description of someone helping the pieces of the case come together. “CC-3” or “Co-Conspirator 3” is identified as “a consultant” for Adidas who “facilitated payments to players and their families as part of the scheme.” Multiple sources confirmed to Yahoo Sports on Tuesday night that “CC-3” is the Massachusetts-based grassroots coach T.J. Gassnola, who has long had ties to Adidas as both a consultant and running the New England Playaz program. Gassnola has a controversial history in New England running his program, as the Boston Globe described him in 2006 as having a “lengthy criminal history and prodigious legacy of financial delinquency.”

*Around September of 2015, a coach at NC State informed Gassnola that a blue-chip high school recruit committed to NC State may change his mind and pick another school. (Sources indicated to Yahoo Sports that the player is Dennis Smith Jr., who played at NC State in 2016-17 and is now an NBA rookie with the Dallas Mavericks.) Nearly a month later, according to the federal documents, Gassnola allegedly withdrew $40,000 in cash from an account and delivered the funds to “Coach-4” at NC State to be delivered to Smith’s dad. Gatto then reimbursed Gassnola with what the federal documents describe as “sham invoices.”

View photos

New federal charges in college basketball scandal allege payments to steer players to Kansas, NC State.

*Around Sept. 11, 2017, Gatto and Gassnola spoke on the phone about making “another $20,000 payment” to the guardian of a player to help him get “out from under” a deal with a rival apparel company to attend Kansas instead of a school sponsored by the other shoe company. Sources told Yahoo Sports that the player is Kansas freshman Silvio De Sousa, and his commitment date to the school matches the one in the federal documents. The paperwork states that De Sousa was more interested in attending Kansas, but his guardian allegedly said he needed to “repay the illicit payments in order to do so.” A Baltimore Sun story from Aug. 30, 2017, characterized De Sousa’s Kansas commitment as a surprise after being considered likely to attend Under Armour-backed Maryland.

To be clear here, in order for one shoe company to direct a player to its preferred school, the documents allege it needed to buy out a previous deal by another shoe company to direct the player to its preferred school. That player, De Sousa, was considered a very good but not truly elite recruit that would turn pro after just a single season. As a freshman, he averaged just 8.8 minutes a game for Kansas. That’s how deep this system runs.

The federal documents also say there’s discussion about how Adidas and Gatto would reimburse Gassnola for the payment. It did not explicitly say a payment was made. The guardian, Fenny Falmagne, denied taking money in an interview with the Kansas City Star. “We did not take any money,” Falmagne said. “The kids and I never took money from anyone.”

If the NCAA is able to establish that Falmagne received money to steer De Sousa to Kansas, the Jayhawks’ 2018 Final Four appearance could be in jeopardy. De Sousa was a key reserve on the team, appearing in 20 games after gaining his eligibility in mid-January.

*The federal paperwork details how Adidas, Gatto and Gassnola allegedly helped “funnel payments” of $90,000 to the parent of a Kansas recruit that Yahoo Sources confirmed was Billy Preston. The federal paperwork again detailed “sham invoices” that delivered the money from Adidas through Gassnola’s AAU program. The payments allegedly included Gassnola delivering $30,000 to Preston’s relative – “Parent-3” in a New York City hotel, another $20,000 in cash in a Las Vegas hotel and later wire transferring another $15,000. Gatto enabled these payments by delivering large sums of money to Gassnola disguised as “Basketball Team Tournaments Fee,” “2017 First Quarter Consultant Fee and T and E” and “Tournament/Activation Fee.” (Preston attended school but never suited up for the Jayhawks in the regular season. He played in a pair of exhibition games, was suspended from the opener and then left school after a car accident raised questions about the ownership of the car. Kansas coach Bill Self said at the time it was necessary to find a “clearer financial picture specific to the vehicle.”)

The federal paperwork isn’t as specific about the dates surrounding Preston’s recruitment as they were with De Sousa, as the documents say the agreement to make the alleged payments for Preston came in October of 2016, “shortly after the student-athlete … unofficially committed to attend the University of Kansas.” Preston committed on Nov. 18, 2016, but did visit the school the weekend of Oct. 1 for Late Night in the Phog.

Experts following the case say that the new charges paint a more pessimistic outlook for Gatto. (His attorney did not respond to requests for comment.) The broadening of the wire-fraud conspiracy case – expanding the scope by two more schools – and the addition of specifics and “sham invoices” appears to be a strengthening of what the feds first unveiled in September. “These counts look far tighter and more focused than what’s previously been made public in the original indictments,” said a person familiar with the case.

One important factor, experts say, is that both De Sousa and Smith Jr. played in games for Kansas and NC State, the schools where the players ended up after the alleged arrangements via Adidas. The legal theory of the case is that the universities could have been harmed because of the threat of NCAA sanctions, which appear to be realistic if both De Sousa and Smith Jr. are retroactively ruled ineligible.

With the third of three trials scheduled in the case slated for April of 2019, it appears likely that there will be more incremental movement in the upcoming months.

“This is of little surprise to anyone who has followed the breaking news of this investigation since the fall of 2017,” said Stu Brown, an Atlanta-based attorney with extensive experience in NCAA issues. “This is not going to be over anytime soon. Just because a school or coach or student-athlete or company’s name has not surfaced to date does not mean that any of those people or entities can be comfortable that their name won’t come out tomorrow. This is an indication that people are talking to the federal authorities, and paper trails perhaps are being established, and the federal authorities are getting more detail than they had six months ago.”

One of the clearest indications that people are talking to authorities is the disappearance of the name of Munish Sood, a New Jersey-based financial adviser originally charged in September, from the paperwork. He’d been charged for his role in funneling money to the father of former Louisville recruit Brian Bowen.

This is what the original federal complaint alleged: “On or about July 13, 2017, [Bowen’s father] stated that he was renting a car to travel to meet Munish Sood, the defendant. [Christian] Dawkins told [Bowen’s father] that Sood had $19,500 for [Bowen’s father]. … ” This is what the superseded indictment says: “[Bowen’s father] traveled through New York, New York, to receive the first cash payment, which he did during a meeting with [co-conspirator 1] in New Jersey.”

Sometime between late September 2017 and April 2018, Munish Sood became co-conspirator 1, which outside experts say is an indication of cooperation with the authorities. He’s one of three co-conspirators mentioned in the superseded indictment released Tuesday.

“It’s foreseeable, though not guaranteed, that this becomes a snowball rolling downhill,” Brown said. “The more people who talk could lead to more issues coming out. I don’t think anyone can say where, or when, this will end. There are too many unknowns at this point.”

In a departure from the September federal complaint, the language was slightly softened regarding an unnamed Miami coach’s alleged involvement in a scheme to pay an unnamed recruit in the superseded indictment. The recruit was Orlando Christian Prep’s Nassir Little, who ultimately signed last fall with North Carolina.

The original complaint stated that Dawkins and Code were on a wiretap discussing “the involvement of Coach-3 in ensuring that [Adidas] would funnel payments to [Little]. … ” The original complaint said Coach-3 “knows everything” about the alleged payment plan.

The superseded complaint says that Coach-3 needed to call Gatto “as part of the scheme” and that Coach-3 “knows something gotta happen for it to get done.” The complaint also said that Gatto confirmed he had spoken with Miami coaches and was aware of the request for Adidas’ help in securing Little’s commitment, but no longer mentioned Coach-3 being involved in funneling payments or knowing “everything” about a payment plan.